Wednesday, May 27, 2015

Public Utilities: A Tax Hidden In Plain Sight

Public Utilities: A Tax Hidden In Plain Sight | Somewhat Reasonable
...This drain on the economy is made far worse given every business and household is directly and indirectly impacted by the seemingly never-ending rise in utility prices (plus poor quality, and lack of innovation). 
The state and federal regulation of these ‘so called’ natural monopolies (very worryingly, now including the Internet) in fact virtually ‘locks in’ such an upward trajectory. 
Thus, it is in reality a tax hidden in plain sight.
The reason this system of regulation is akin to a tax, is that unlike most other forms of regulation, it regularly produces readily identifiable impacts in the form of the regulated prices that have to be paid directly or indirectly by every business and household in the country. 
These ‘pseudo-taxes’ are almost always on the rise like real taxes (as per the diagram below), and also like the latter include all of the predictable inefficiencies associated with government central planning (ie the government regulators) and government protected cronyism (ie the utilities themselves).
It has thus been largely taken for granted for well over a century that these natural monopoly markets fail and thus should continue to be directly and indirectly regulated as well as sometimes continue to be government owned … despite the fact that therefore prices always go up, quality always goes down, and innovation is completely lacking..."

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